Emerging-Market Central Bank Purchases Can be Effective but Carry Risks

In a new IMF blog (2022), Tobias Adrian et al write about the effectiveness and risks of counter-cyclical monetary policy measures taken by central banks in emerging markets, specifically asset purchases.

‘Targeted asset purchases helped emerging markets manage financial distress during the COVID-19 crisis without noticeable capital outflow and exchange rate pressures but also pose significant risks, including the risk to central banks’ own balance sheets and governments pressuring central banks to act in a certain way’. It then goes on to discuss some principles for asset purchases and direct financing that may help central banks override this problem.

Click here to read the full blog.

Posted by at 9:29 AM

Labels: Macro Demystified


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